MFN Model Rule under Temporary Restraining Order (TRO)

According to news reports from Reuters and Modern Healthcare (subscriber only content), a judge in Maryland has issued a temporary restraining order (TRO) for 14 days (which will expire January 6th) to prevent CMS from implementing the Most Favored Nation (MFN) Model Rule on January 1, 2021. The restraining order was on the basis that CMS did not give adequate notice as required under the Administrative Procedures Act and that there is the potential for irreparable harm. The TRO can be extended again, a hearing can be held during the order, or the TRO can expire.

 A reader has asked, “What do we do now?” and our response, “We don’t know exactly what will happen!”

 The M1145 code is posted in the CMS quarterly updates as a valid code, but since the definition includes “MFN drug” and that is defined in the rule that is under the TRO, it is unclear if that is really a valid code on 1/1/2021.

In addition, CMS has not released either the Addendum B or the OCE update (as of this morning 12/28/2020) which will have the payment rates for 1/1/2021 that are embedded in the software that the MACs use to process claims. So it is possible that even through there is the TRO, the “payments” may be the MFN rates until this is resolved. Claims could potentially be reprocessed by CMS whichever direction it goes in. 

So—as far as advice to our readers—that all depends. Typically facilities will hold outpatient claims each quarter until the Outpatient Grouper is loaded which usually takes 10-14 days. Then the facility will “regroup” the claims to pick up the new/revised codes. So we do probably have about 2 weeks for this to shake out before it impacts our actual claims processing.

With that, you could:

1. If the programming is in place to automate M1145, you could implement on 1/1/2021 and hold claims until the outpatient grouper is loaded. At that point you can make a decision to process them as is, or to put in an edit to “strip” the M1145 code before transmitting the claim if the rule is delayed.
2. You could not implement the M1145 and wait to see what happens. You will report the same HCPCS code for the drug no matter if the rule is further delayed or not, so you are really talking about the drug add-on payment (M1145) as being in dispute. Then if by the time you get ready to transmit your claims, you can decide whether to go back and add the M1145 to your existing claims, if needed.

So—you are right. It is anyone’s guess. We don’t have a crystal ball. We would suspect that CMS will continue to argue that it is necessary for price controls, however, they may delay implementation for a quarter or two to give everyone an opportunity to provide comments by the deadline of January 26 and for CMS to respond to them.

We have a number of questions open with CMS right now, but have not heard back from them on any of them yet but are following these developments closely and will let everyone know as the court case progresses.

 Happy New Year!

Maxie and Agatha